FLAGSTAR BANCORP, INC. TROY, Mich., Jan. 26, 2016 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported fourth quarter 2015 net income of $33 million, or $0.44 per diluted share, as compared to $47 million in the third quarter 2015, or $0.69 per diluted share, and net income of $11 million in the fourth quarter 2014, or $0.07 per diluted share. The full year 2015 net income was $158 million, or $2.24 per diluted share, as compared to a full year 2014 net loss of $70 million, or $1.72 loss per diluted share.
"Flagstar had a very good year in 2015, posting the highest level of pre-tax income since 2003," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "We made continued progress in the fourth quarter, generating higher net interest income through solid growth in earning assets and maintaining a clean credit profile."
"As we expected, our mortgage revenues were seasonally lower. We were also impacted by TRID. The Company took a careful approach with the implementation of TRID, taking greater control in creating and delivering disclosure documents. Given our predominantly third party business model, we experienced more of an impact than other bank originators. We are taking steps to address this issue while building market share in our distributed and direct-to-consumer retail channels."
"We look forward to 2016. Despite the economic uncertainties created by Fed tightening and the regulatory challenges the industry faces, we like our position. We have a solid business plan, a strong balance sheet, a more profitable and diversified business mix and the team we want. We continue to grow our businesses, our regulatory relationships are strong and we remain confident we will move toward optimizing our capital structure in 2016 with the expected redemption of our TARP preferred and the restoration of interest payments on our Trust Preferred securities."
Fourth Quarter 2015 Highlights:
Income Statement Highlights
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
Consolidated Statements of Income
Net interest income $76 $73 $73 $65 $61
(Benefit) provision for loan losses (1) (1) (13) (4) 5
Noninterest income 97 128 126 119 98
Noninterest expense 129 131 138 138 139
--- --- --- --- ---
Income before income taxes 45 71 74 50 15
Provision for income taxes 12 24 28 18 4
--- --- --- --- ---
Net income $33 $47 $46 $32 $11
=== === === === ===
Income per share:
Basic $0.45 $0.70 $0.69 $0.43 $0.07
Diluted $0.44 $0.69 $0.68 $0.43 $0.07
Key Ratios
Three Months Ended Change (bps)
------------------ -----------
December 31, September 30, June 30, March 31, December 31, Seq Yr/Yr
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Net interest margin 2.69% 2.75% 2.79% 2.75% 2.80% (6) (11)
Return on average assets 1.0% 1.5% 1.6% 1.2% 0.4% (50) 60
Return on average equity 8.6% 12.4% 12.7% 8.9% 3.2% (380) 540
Balance Sheet Highlights
Three Months Ended % Change
------------------ --------
December 31, September 30, June 30, March 31, December 31, Seq Yr/Yr
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
Average Balance Sheet
Average interest-earning assets $11,240 $10,693 $10,367 $9,422 $8,725 5% 29%
Average loans held-for-sale 2,484 2,200 2,218 1,842 1,687 13% 47%
Average loans held-for-investment 5,642 5,412 4,938 4,293 4,031 4% 40%
Average total deposits 8,132 8,260 7,736 7,368 7,146 (2)% 14%
Net Interest Income
Fourth quarter 2015 net interest income increased $3 million, or 4 percent, to $76 million, compared to $73 million for the third quarter 2015. The results were led by earning asset growth of 5 percent, partially offset by a slight drop in net interest margin.
Net interest margin decreased 6 basis points to 2.69 percent for the fourth quarter 2015, as compared to 2.75 percent for the third quarter 2015. The decrease from the prior quarter was primarily driven by a lower yield on mortgage loans and loans repurchased with government guarantees, partially offset by lower funding costs on FHLB advances. The net interest margin was also negatively impacted by a seasonal decline in company-controlled deposits due to tax payments.
Average loans held-for-investment totaled $5.6 billion for the fourth quarter 2015, increasing $230 million, or 4 percent, compared to the third quarter 2015. The increase was driven by higher commercial real estate and mortgage loans. Average commercial real estate loans grew $115 million, or 17 percent, and average residential mortgage loans rose $77 million, or 3 percent.
Average total deposits were $8.1 billion in the fourth quarter 2015, decreasing $128 million, or 2 percent, from the prior quarter. The decline was led by a seasonal drop in company-controlled deposits, partially offset by an increase in government and retail deposits. Average company-controlled deposits decreased $244 million, or 16 percent, due to tax payments. Average government deposits rose $49 million, or 5 percent, due to seasonal increases. Average retail deposits increased $67 million, or 1 percent, led by a 4 percent increase in demand deposits.
Provision for Loan Losses
The Company experienced a provision benefit in the fourth quarter 2015, resulting primarily from the full payoff of a commercial loan. The benefit for loan losses totaled $1 million for the fourth quarter 2015, unchanged from a benefit of $1 million for the third quarter 2015.
Net charge-offs in the fourth quarter 2015 were $9 million, or 0.62 percent of applicable loans, compared to $24 million, or 1.84 percent of applicable loans in the prior quarter. The fourth quarter 2015 amount included $2 million of net charge-offs associated with the sale of $11 million (unpaid principal balance) of nonperforming loans. The third quarter 2015 amount included $16 million of net charge-offs associated with the sale of $233 million (unpaid principal balance) of interest-only and lower performing loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent of applicable loans, compared to $8 million, or 0.61 percent of applicable loans in the prior quarter.
Noninterest Income
Fourth quarter 2015 noninterest income decreased $31 million, or 24 percent, to $97 million, as compared to $128 million for the third quarter 2015. The fourth quarter 2015 results were led by lower net gain on loan sales, a decline in loan fees and charges and a reduced net return on the mortgage servicing asset.
Fourth quarter 2015 net gain on loan sales decreased $22 million, or 32 percent, to $46 million, as compared to $68 million for the third quarter 2015, due to seasonal factors and the impact of TRID. In the fourth quarter 2015, fallout-adjusted locks decreased 23 percent to $5.0 billion. The Company took a careful approach with TRID implementation, taking greater control in creating and delivering disclosure documents. It experienced more of an impact than other bank originators due to its third party business model. The net gain on loan sale margin fell 13 basis points to 0.92 percent for the fourth quarter 2015, as compared to 1.05 percent for the third quarter 2015, led by price competition. The Company has initiated a plan to address its volume levels and continues to build a stronger distributed and direct-to-consumer retail business.
Mortgage Metrics
Three Months Ended Change (% / bps)
------------------ ----------------
December 31, September 30, June 30, March 31, December 31, Seq Yr/Yr
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
GOS margin (change in bps) (1) 0.92% 1.05% 1.21% 1.27% 0.87% (13) 5
Gain on loan sales $46 $68 $83 $91 $53 (32)% (13)%
Mortgage rate lock commitments (fallout-adjusted) (2) $5,027 $6,495 $6,804 $7,185 $6,156 (23)% (18)%
Residential loans serviced (number 361 369 378 385 383 (2)% (6)%
of accounts - 000's) (3)
Capitalized value of mortgage servicing rights 1.13% 1.12% 1.15% 1.03% 1.01% 1 12
(1) Gain on sale margin is based on net gain on loan sales to fallout-adjusted mortgage rate
lock commitments.
(2) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage
loans in the pipeline that are not expected to close based on previous historical
experience and the level of interest rates.
(3) Includes serviced for own loan portfolio, serviced for others and subserviced for others
loans.
Loan fees and charges fell to $14 million for the fourth quarter 2015, as compared to $17 million in the third quarter 2015. The decrease primarily reflected lower mortgage closings.
Net return on the mortgage servicing asset (including the impact of economic hedges) fell to $9 million for the fourth quarter 2015, as compared to $12 million for the third quarter 2015. The decrease from the prior quarter primarily reflected a smaller impact from the collection of contingencies held back by the purchaser relating to MSR sales in prior periods. Excluding the impact of net transaction costs, the return on the mortgage servicing asset was 11 percent, which was consistent with the prior quarter. The return in the fourth quarter 2015 was better than the Company's long-term return target as it benefited from slower prepayments and positive economic hedging results.
Noninterest Expense
Noninterest expense decreased $2 million, or 2 percent, to $129 million for the fourth quarter 2015, as compared to $131 million for the third quarter 2015. The fourth quarter 2015 results were driven by lower commissions and loan processing expense related to decreased business activity and lower federal insurance premiums, partially offset by higher asset resolution expense.
Commissions were $8 million for the fourth quarter 2015, as compared to $10 million for the third quarter 2015. The $2 million decrease in the fourth quarter 2015 was primarily attributable to lower mortgage closings.
Fourth quarter 2015 asset resolution expense was $2 million higher than third quarter 2015. The prior quarter reflected a benefit for reimbursements. The low level of asset resolution expense in the fourth quarter 2015 reflected the Company's success in de-risking the balance sheet.
Federal insurance premiums were $5 million for the fourth quarter 2015, as compared to $6 million for the third quarter 2015, reflecting the Company's improved risk profile.
Loan processing expense was $12 million for the fourth quarter 2015, as compared to $14 million for the third quarter 2015. The $2 million decline in the current quarter was primarily attributable to lower mortgage closings.
Income Taxes
The fourth quarter 2015 provision for income taxes totaled $12 million, as compared to $24 million in the third quarter 2015. The effective tax rate in the fourth quarter 2015 was 27 percent, as compared to 34 percent in the third quarter 2015. The decline in the marginal tax rate in the fourth quarter 2015 resulted primarily from benefits associated with state income taxes.
Asset Quality
Credit Quality Ratios
Three Months Ended Change (% / bps)
------------------ ----------------
December 31, September 30, June 30, March 31, December 31, Seq Yr/Yr
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
Allowance for loan loss to LHFI 3.0% 3.7% 4.3% 5.7% 7.0% (70) (400)
Charge-offs, net of recoveries $9 $24 $18 $41 $9 (63)% - %
Charge-offs, net of recoveries, $7 $8 $3 $5 $6 (13)% 17%
adjusted (1)
Total nonperforming loans held-for- $66 $63 $65 $84 $120 5% (45)%
investment
Net charge-off ratio (annualized) 0.62% 1.84% 1.49% 3.97% 0.91% (122) (29)
Net charge-off ratio, adjusted (annualized) (1) 0.51% 0.61% 0.26% 0.45% 0.60% (10) (9)
Nonperforming loans to LHFI 1.05% 1.15% 1.22% 1.81% 2.71% (10) (166)
(1) Excludes charge-
offs of $2
million, $16
million, $15
million, $36
million and $3
million related
to the sale or
transfer of
nonperforming
loans and TDRs
during the three
months ended
December 31,
2015, September
30, 2015, June
30, 2015, March
31, 2015, and
December 31,
2014,
respectively.
The allowance for loan losses was $187 million at December 31, 2015, covering 3.0 percent of loans held-for-investment. The allowance for loan losses was $197 million at September 30, 2015, covering 3.7 percent of loans held-for-investment. The decrease in the allowance for loan losses in the fourth quarter 2015 was largely due to charge-offs of residential mortgages, the sale of nonperforming loans and the addition of higher credit quality loans to the portfolio.
Fourth quarter 2015 net charge-offs were $9 million, representing 0.62 percent of applicable loans. This represented a decrease of $15 million from the third quarter 2015 net charge-offs of $24 million, or 1.84 percent of applicable loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent, compared to $8 million, or 0.61 percent in the prior quarter. Fourth quarter 2015 net charge-offs included $3 million of loans with government guarantees. The remaining $4 million of charge-offs accounted for 0.29 percent of applicable loans.
Nonperforming loans increased to $66 million at December 31, 2015 from $63 million at September 30, 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 1.05 percent at December 31, 2015 from 1.15 percent at September 30, 2015. At December 31, 2015, consumer loan delinquencies (30-89 days past due) totaled $14 million, or 38 basis points, a decrease of 25 basis points from September 30, 2015 and a decrease of 129 basis points from the same period last year. There were no commercial loan delinquencies (30-89 days past due) at December 31, 2015.
Capital
Capital Ratios (Bancorp) (1) Three Months Ended Change (% / bps)
------------------ ----------------
December 31, September 30, June 30, March 31, December 31, Seq Yr/Yr
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Total capital 20.28% 21.64% 21.30% 22.61% 24.12% (136) (384)
Tier 1 capital 18.98% 20.32% 19.97% 21.26% 22.81% (134) (383)
Tier 1 leverage 11.51% 11.65% 11.47% 12.02% 12.59% (14) (108)
Mortgage servicing rights to Tier 1 20.63% 21.12% 24.20% 22.20% 21.80% (49) (117)
capital
Book value per common share (change in percent) $22.33 $21.91 $20.98 $20.43 $19.64 2% 14%
(1) On January 1, 2015, the Basel III rules became effective,
subject to transition provisions primarily related to
regulatory deductions and adjustments impacting common equity
Tier 1 capital and Tier 1 capital. We reported under Basel I
(which included the Market Risk Final Rules) at December 31,
2014 and prior.
The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At December 31, 2015, the Company had a Tier 1 leverage ratio of 11.51 percent, as compared to 11.65 percent at September 30, 2015. The decrease in the ratio resulted from the deployment of capital for balance sheet growth. At December 31, 2015, the Company had a common equity-to-assets ratio of 9.20 percent.
Earnings Conference Call
As previously announced, the Company's fourth quarter 2015 earnings call will be held Tuesday, January 26, 2016 at 11 a.m. (ET).
To join the call, please dial (877) 780-3381 toll free or (719) 457-2621, and use passcode 4668782. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820, using passcode 4668782.
The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com.
It will be archived on that site and will be available for replay and download. The slide presentation accompanying the conference call will be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is a $13.7 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, the largest bank headquartered in Michigan, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 10 retail centers in nine states. Flagstar is the 10th largest national originator of mortgage loans and a top 20 mortgage servicer, handling payments and record keeping for over $72.5 billion home loans for over 360,000 borrowers. For more information, please visit flagstar.com.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release includes non-GAAP financial measures such as the ratio of total nonperforming assets to Tier 1 capital (to adjusted total assets) and estimated Basel III ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, there are practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that the Company's performance is properly reflected to facilitate consistent period-to-period comparisons. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this press release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company's website at flagstar.com.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.'s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions)
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
(Unaudited) (Unaudited)
Assets
Cash and cash equivalents
Cash $54 $65 $47
Interest-earning deposits 154 130 89
--- --- ---
Total cash and cash equivalents 208 195 136
Investment securities available-for-sale 1,294 1,150 1,672
Investment securities held-to-maturity 1,268 1,108 -
Loans held-for-sale 2,576 2,408 1,244
Loans with government guarantees 485 509 1,128
Loans held-for-investment, net
Loans held-for-investment 6,352 5,514 4,448
Less: allowance for loan losses (187) (197) (297)
---- ---- ----
Total loans held-for-investment, net 6,165 5,317 4,151
Mortgage servicing rights 296 294 258
Federal Home Loan Bank stock 170 113 155
Premises and equipment, net 250 243 238
Net deferred tax asset 362 372 442
Other assets 641 810 416
--- --- ---
Total assets $13,715 $12,519 $9,840
======= ======= ======
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $1,574 $1,749 $1,209
Interest-bearing 6,361 6,388 5,860
----- ----- -----
Total deposits 7,935 8,137 7,069
Federal Home Loan Bank advances 3,541 2,024 514
Long-term debt 247 279 331
Representation and warranty reserve 40 45 53
Other liabilities 423 530 500
--- --- ---
Total liabilities 12,186 11,015 8,467
------ ------ -----
Stockholders' Equity
Preferred stock 267 267 267
Common stock 1 1 1
Additional paid in capital 1,486 1,484 1,482
Accumulated other comprehensive income 2 12 8
Accumulated deficit (227) (260) (385)
---- ---- ----
Total stockholders' equity 1,529 1,504 1,373
Total liabilities and stockholders' equity $13,715 $12,519 $9,840
======= ======= ======
Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)
Fourth Quarter 2015 Compared to:
--------------------------------
Three Months Ended Third Quarter Fourth Quarter
2015 2014
---- ----
December 31, September 30, June 30, March 31, December 31, Amount Percent Amount Percent
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Interest Income
Total interest income $95 $91 $90 $79 $72 $4 4% $23 32%
Total interest expense 19 18 17 14 11 1 6% 8 73%
--- --- --- --- --- --- --- --- ---
Net interest income 76 73 73 65 61 3 4% 15 25%
(Benefit) provision for loan losses (1) (1) (13) (4) 5 - - % (6) N/M
--- --- --- --- --- --- --- --- --- ---
Net interest income after provision for loan losses 77 74 86 69 56 3 4% 21 38%
--- --- --- --- --- --- --- --- ---
Noninterest Income
Net gain on loan sales 46 68 83 91 53 (22) (32)% (7) (13)%
Loan fees and charges 14 17 19 17 17 (3) (18)% (3) (18)%
Deposit fees and charges 6 7 6 6 6 (1) (14)% - - %
Loan administration income 7 8 7 4 5 (1) (13)% 2 40%
Net return (loss) on the mortgage servicing asset 9 12 9 (2) 2 (3) (25)% 7 N/M
Net gain (loss) on sale of assets - 1 (2) - 2 (1) (100)% (2) (100)%
Representation and warranty benefit 6 6 5 2 6 - - % - - %
Other noninterest income (loss) 9 9 (1) 1 7 - - % 2 29%
--- --- ---
Total noninterest income 97 128 126 119 98 (31) (24)% (1) (1)%
--- --- --- --- --- --- ---- --- ---
Noninterest Expense
Compensation and benefits 59 58 59 61 59 1 2% - - %
Commissions 8 10 11 10 9 (2) (20)% (1) (11)%
Occupancy and equipment 21 20 20 20 20 1 5% 1 5%
Asset resolution 2 - 5 8 13 2 N/M (11) (85)%
Federal insurance premiums 5 6 6 6 5 (1) (17)% - - %
Loan processing expense 12 14 14 12 11 (2) (14)% 1 9%
Legal and professional expense 9 10 8 9 11 (1) (10)% (2) (18)%
Other noninterest expense 13 13 15 12 11 - - % 2 18%
--- --- --- --- ---
Total noninterest expense 129 131 138 138 139 (2) (2)% (10) (7)%
--- --- --- --- --- --- --- --- ---
Income before income taxes 45 71 74 50 15 (26) (37)% 30 N/M
Provision for income taxes 12 24 28 18 4 (12) (50)% 8 N/M
--- --- --- --- --- --- ---- --- ---
Net income $33 $47 $46 $32 $11 $(14) (30)% $22 N/M
=== === === === === ==== ==== === ===
Income per share
Basic $0.45 $0.70 $0.69 $0.43 $0.07 $(0.25) (36)% $0.38 N/M
===== ===== ===== ===== ===== ====== ==== ===== ===
Diluted $0.44 $0.69 $0.68 $0.43 $0.07 $(0.25) (36)% $0.37 N/M
===== ===== ===== ===== ===== ====== ==== ===== ===
N/M - Not meaningful
Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
Year Ended Year Ended December 31, 2015
Compared to
Year Ended December 31, 2014
----------------------------
December 31, December 31, Amount Percent
2015 2014
---- ----
(Unaudited)
Total interest income $355 $286 $69 24%
Total interest expense 68 39 29 74%
--- --- --- ---
Net interest income 287 247 40 16%
(Benefit) provision for loan losses (19) 132 (151) N/M
--- --- ---- ---
Net interest income after provision for loan losses 306 115 191 N/M
--- --- --- ---
Noninterest Income
Net gain on loan sales 288 206 82 40%
Loan fees and charges 67 73 (6) (8)%
Deposit fees and charges 25 22 3 14%
Loan administration income 26 24 2 8%
Net return on the mortgage servicing asset 28 24 4 17%
Net (loss) gain on sale of assets (1) 12 (13) N/M
Representation and warranty benefit (provision) 19 (10) 29 N/M
Other noninterest income 18 10 8 80%
--- --- --- ---
Total noninterest income 470 361 109 30%
--- --- --- ---
Noninterest Expense
Compensation and benefits 237 233 4 2%
Commissions 39 35 4 11%
Occupancy and equipment 81 80 1 1%
Asset resolution 15 57 (42) (74)%
Federal insurance premiums 23 23 - - %
Loan processing expense 52 37 15 41%
Legal and professional expense 36 51 (15) (29)%
Other noninterest expense 53 63 (10) (16)%
--- ---
Total noninterest expense 536 579 (43) (7)%
--- --- --- ---
Income (loss) before income taxes 240 (103) 343 N/M
Provision (benefit) for income taxes 82 (34) 116 N/M
--- --- --- ---
Net income (loss) 158 (69) 227 N/M
Preferred stock accretion - (1) 1 (100)%
--- --- ---
Net income (loss) $158 $(70) $228 N/M
==== ==== ==== ===
Income (loss) per share
Basic $2.27 $(1.72) $3.99 N/M
===== ====== ===== ===
Diluted $2.24 $(1.72) $3.96 N/M
===== ====== ===== ===
N/M - Not meaningful
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Mortgage loans originated (1) $5,824 $7,876 $6,603 $29,402 $24,608
Mortgage loans sold and securitized $5,164 $7,318 $6,831 $26,306 $24,407
Interest rate spread (2) 2.54% 2.56% 2.67% 2.58% 2.80%
Net interest margin 2.69% 2.75% 2.80% 2.74% 2.91%
Average common shares outstanding 56,449,596 56,436,026 56,310,858 56,426,977 56,246,528
Average fully diluted shares outstanding 57,502,017 57,207,503 56,792,751 57,164,523 56,246,528
Average interest-earning assets $11,240 $10,693 $8,725 $10,436 $8,440
Average interest-paying liabilities $9,078 $8,354 $6,918 $8,305 $6,780
Average stockholders' equity $1,547 $1,510 $1,395 $1,486 $1,406
Return (loss) on average assets 1.03% 1.52% 0.44% 1.32% (0.71)%
Return (loss) on average equity 8.56% 12.41% 3.18% 10.63% (4.97)%
Efficiency ratio 75.15% 65.00% 87.20% 70.89% 95.40%
Equity-to-assets ratio (average for the period) 12.07% 12.27% 13.74% 12.43% 14.22%
Charge-offs to average LHFI (3) 0.62% 1.84% 0.91% 1.85% 1.07%
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Book value per common share $22.33 $21.91 $19.64
Number of common shares outstanding 56,483,258 56,436,026 56,332,307
Mortgage loans subserviced for others $40,244 $42,282 $46,724
Mortgage loans serviced for others $26,145 $26,306 $25,427
Weighted average service fee (basis points) 27.7 28.3 27.2
Capitalized value of mortgage servicing rights 1.13% 1.12% 1.01%
Mortgage servicing rights to Tier 1 capital 20.63% 21.12% 21.80%
Ratio of allowance for loan losses to LHFI (3) 3.00% 3.66% 7.01%
Ratio of nonperforming assets to total assets 0.61% 0.64% 1.41%
Equity-to-assets ratio 11.14% 12.01% 13.95%
Common equity-to-assets ratio 9.20% 9.88% 11.24%
Number of bank branches 99 99 107
Number of FTE employees 2,713 2,677 2,739
(1) Includes residential first
mortgage and second
mortgage loans.
(2) Interest rate spread is the
difference between the
annualized yield earned on
average interest-earning
assets for the period and
the annualized rate of
interest paid on average
interest-bearing
liabilities for the period.
(3) Excludes loans carried under
the fair value option.
Flagstar Bancorp, Inc.
Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Net income (loss) $33 $47 $11 $158 $(69)
Less: preferred stock accretion - - - - (1)
--- --- --- --- ---
Net income (loss) from continuing operations 33 47 11 158 (70)
Deferred cumulative preferred stock dividends (8) (8) (7) (30) (26)
--- --- --- --- ---
Net income (loss) applicable to Common Stockholders $25 $39 $4 $128 $(96)
=== === === ==== ====
Weighted Average Shares
Weighted average common shares 56,449,596 56,436,026 56,310,858 56,426,977 56,246,528
outstanding
Effect of dilutive securities
Warrants 348,939 339,478 248,202 305,484 -
Stock-based awards 703,482 431,999 233,691 432,062 -
------- ------- ------- ------- ---
Weighted average diluted common shares 57,502,017 57,207,503 56,792,751 57,164,523 56,246,528
========== ========== ========== ========== ==========
Earnings (loss) per common share
Net income (loss) applicable to Common Stockholders $0.45 $0.70 $0.07 $2.27 $(1.72)
Effect of dilutive securities
Warrants - - - (0.01) -
Stock-based awards (0.01) (0.01) - (0.02) -
----- ----- --- ----- ---
Diluted earnings (loss) per share $0.44 $0.69 $0.07 $2.24 $(1.72)
===== ===== ===== ===== ======
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
December 31, 2015 September 30, 2015 December 31, 2014
----------------- ------------------ -----------------
Average Balance Interest Annualized Average Balance Interest Annualized Average Balance Interest Annualized
Yield/Rate Yield/Rate Yield/Rate
--- --- --- ----------
Interest-Earning Assets
Loans held-for-sale $2,484 $24 3.88% $2,200 $22 3.94% $1,687 $18 4.20%
Loans with government guarantees 496 4 2.84% 547 5 3.37% 1,141 6 1.96%
Loans held-for-investment
Consumer loans (1) 3,423 30 3.52% 3,367 30 3.67% 2,510 23 3.81%
Commercial loans (1) 2,219 21 3.77% 2,045 20 3.80% 1,521 14 3.62%
----- --- ----- --- ----- ---
Total loans held-for-investment 5,642 51 3.62% 5,412 50 3.72% 4,031 37 3.74%
Investment securities 2,441 16 2.55% 2,313 14 2.50% 1,621 11 2.66%
Interest-earning deposits 177 - 0.49% 221 - 0.53% 245 - 0.23%
--- --- --- --- --- ---
Total interest-earning assets 11,240 $95 3.36% 10,693 $91 3.42% 8,725 $72 3.30%
Other assets 1,585 1,612 1,429
----- ----- -----
Total assets $12,825 $12,305 $10,154
======= ======= =======
Interest-Bearing Liabilities
Retail deposits
Demand deposits $431 $ - 0.13% $429 $ - 0.14% $421 $ - 0.14%
Savings deposits 3,725 8 0.84% 3,732 8 0.84% 3,394 6 0.68%
Money market deposits 272 - 0.39% 262 - 0.33% 257 - 0.22%
Certificates of deposit 813 2 0.88% 785 2 0.80% 837 1 0.68%
--- --- --- --- --- ---
Total retail deposits 5,241 10 0.76% 5,208 10 0.75% 4,909 7 0.61%
Government deposits
Demand deposits 304 - 0.40% 286 - 0.39% 230 - 0.39%
Savings deposits 401 1 0.52% 445 1 0.52% 386 1 0.52%
Certificates of deposit 410 1 0.45% 335 - 0.40% 373 - 0.36%
--- --- --- --- --- ---
Total government deposits 1,115 2 0.46% 1,066 1 0.45% 989 1 0.43%
Total interest-bearing deposits 6,356 12 0.71% 6,274 11 0.70% 5,898 8 0.58%
Federal Home Loan Bank advances 2,445 5 0.92% 1,795 5 1.17% 773 1 0.24%
Other 277 2 2.66% 285 2 2.51% 247 2 2.84%
--- --- --- --- --- ---
Total interest-bearing liabilities 9,078 19 0.83% 8,354 18 0.86% 6,918 11 0.62%
Noninterest-bearing deposits (2) 1,776 1,986 1,247
Other liabilities 424 455 594
Stockholders' equity 1,547 1,510 1,395
----- ----- -----
Total liabilities and stockholder's equity $12,825 $12,305 $10,154
======= ======= =======
Net interest-earning assets $2,162 $2,339 $1,807
====== ====== ======
Net interest income $76 $73 $61
=== === ===
Interest rate spread (3) 2.54% 2.56% 2.67%
==== ==== ====
Net interest margin (4) 2.69% 2.75% 2.80%
==== ==== ====
Ratio of average interest-earning assets to interest-bearing liabilities 123.8% 128.0% 126.1%
===== ===== =====
Total average deposits $8,132 $8,260 $7,146
====== ====== ======
(1) Consumer loans include:
residential first mortgage,
second mortgage, HELOC and
other consumer loans.
Commercial loans include:
commercial real estate,
commercial and industrial,
and warehouse lending loans.
(2) Includes company-controlled
deposits that arise due to
the servicing of loans for
others, which do not bear
interest.
(3) Interest rate spread is the
difference between rate of
interest earned on interest-
earning assets and rate of
interest paid on interest-
bearing liabilities.
(4) Net interest margin is net
interest income divided by
average interest-earning
assets.
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Year Ended
----------
December 31, 2015 December 31, 2014
----------------- -----------------
Average Balance Interest Annualized Average
Balance Interest Annualized
Yield/Rate Yield/Rate
--- --- ----------
Interest-Earning Assets
Loans held-for-sale $2,188 $85 3.90% $1,534 $65 4.24%
Loans with government guarantees 633 18 2.86% 1,216 29 2.39%
Loans held-for-investment
Consumer loans (1) 3,083 114 3.68% 2,681 103 3.85%
Commercial loans (1) 1,993 78 3.88% 1,294 49 3.70%
----- --- ----- ---
Total loans held-for-investment 5,076 192 3.76% 3,975 152 3.80%
Investment securities 2,305 59 2.55% 1,496 39 2.61%
Interest-earning deposits 234 1 0.50% 219 1 0.25%
--- --- --- ---
Total interest-earning assets 10,436 $355 3.39% 8,440 $286 3.38%
Other assets 1,520 1,446
----- -----
Total assets $11,956 $9,886
======= ======
Interest-Bearing Liabilities
Retail deposits
Demand deposits $429 $1 0.14% $422 $1 0.14%
Savings deposits 3,693 30 0.82% 3,139 18 0.61%
Money market deposits 258 1 0.31% 266 1 0.20%
Certificates of deposit 787 6 0.77% 915 6 0.73%
--- --- --- ---
Total retail deposits 5,167 38 0.73% 4,742 26 0.57%
Government deposits
Demand deposits 257 1 0.39% 182 1 0.38%
Savings deposits 405 2 0.52% 320 2 0.51%
Certificates of deposit 358 1 0.39% 349 1 0.33%
--- --- --- ---
Total government deposits 1,020 4 0.44% 851 4 0.41%
----- --- --- ---
Total interest-bearing deposits 6,187 42 0.68% 5,593 30 0.54%
Federal Home Loan Bank advances 1,811 19 1.00% 939 2 0.23%
Other 307 7 2.42% 248 7 2.72%
--- --- --- ---
Total interest-bearing liabilities 8,305 68 0.82% 6,780 39 0.58%
Noninterest-bearing deposits (2) 1,690 1,141
Other liabilities 475 559
Stockholders' equity 1,486 1,406
Total liabilities and stockholder's equity $11,956 $9,886
======= ======
Net interest-earning assets $2,131 $1,660
====== ======
Net interest income $287 $247
==== ====
Interest rate spread (3) 2.58% 2.80%
==== ====
Net interest margin (4) 2.74% 2.91%
==== ====
Ratio of average interest-earning assets to interest-bearing liabilities 125.7% 124.5%
===== =====
Total average deposits $7,877 $6,734
====== ======
(1) Consumer loans include:
residential first mortgage,
second mortgage, HELOC and
other consumer loans.
Commercial loans include:
commercial real estate,
commercial and industrial,
and warehouse lending loans.
(2) Includes company-controlled
deposits that arise due to
the servicing of loans for
others, which do not bear
interest.
(3) Interest rate spread is the
difference between rate of
interest earned on interest-
earning assets and rate of
interest paid on interest-
bearing liabilities.
(4) Net interest margin is net
interest income divided by
average interest-earning
assets.
Gain on Loan Sales
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
Net gain on loan sales $46 $68 $83 $91 $53
Mortgage rate lock commitments (gross) $6,258 $8,025 $8,400 $9,035 $7,605
Loans sold and securitized $5,164 $7,318 $7,571 $6,254 $6,831
Mortgage rate lock commitments (fallout-
adjusted) (1) $5,027 $6,495 $6,804 $7,185 $6,156
Net margin on mortgage 0.92% 1.05% 1.21% 1.27% 0.87%
rate lock commitments
(fallout-adjusted) (1)
Year Ended
----------
December 31, December 31,
2015 2014
---- ----
(Dollars in millions)
Net gain on
loan sales $288 $206
Mortgage rate
lock
commitments
(gross) $31,718 $29,546
Loans sold and
securitized $26,306 $24,407
Mortgage rate
lock
commitments
(fallout-
adjusted) (1) $25,512 $24,007
Net margin on
mortgage rate
lock
commitments
(fallout-
adjusted) (1) 1.13% 0.86%
(1) Fallout-adjusted mortgage rate
lock commitments are adjusted by
a percentage of mortgage loans
in the pipeline that are not
expected to close based on
previous historical experience
and the level of interest rates.
The net margin is based on net
gain on loan sales to fallout-
adjusted mortgage rate lock
commitments.
Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted $1,435 11.51% $1,393 11.65% $1,309 11.47% $1,257 12.02% $1,184 12.59%
tangible assets) (1)
Total adjusted tangible asset base $12,474 $11,957 $11,406 $10,453 $9,403
======= ======= ======= ======= ======
Tier 1 common equity (to risk weighted assets)
(1) $1,065 14.09% $1,024 14.93% $954 14.56% $909 15.38% N/A N/A
Tier 1 capital (to risk weighted assets) (1) $1,435 18.98% $1,393 20.32% $1,309 19.97% $1,257 21.26% $1,184 22.81%
Total capital (to risk weighted assets) $1,534 20.28% $1,483 21.64% $1,396 21.30% $1,336 22.61% $1,252 24.12%
------ ------ ------ ------ ------
Risk weighted asset base $7,561 $6,857 $6,553 $5,909 $5,190
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transition
provisions primarily related
to regulatory deductions and
adjustments impacting common
equity Tier 1 capital and
Tier 1 capital. We reported
under Basel I (which included
the Market Risk Final Rules)
at December 31, 2014 and
prior.
N/A - Not applicable.
Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted $1,472 11.79% $1,426 11.91% $1,337 11.70% $1,278 12.21% $1,167 12.43%
tangible assets) (1)
Total adjusted tangible asset $12,491 $11,975 $11,424 $10,471 $9,392
base
Tier 1 common equity (to risk weighted assets)
(1) $1,472 19.42% $1,426 20.75% $1,337 20.35% $1,278 21.58% N/A N/A
Tier 1 capital (to risk weighted assets) (1) $1,472 19.42% $1,426 20.75% $1,337 20.35% $1,278 21.58% $1,167 22.54%
Total capital (to risk weighted assets) $1,570 20.71% $1,516 22.05% $1,423 21.66% $1,357 22.91% $1,235 23.85%
------ ------ ------ ------ ------
Risk weighted asset base $7,582 $6,874 $6,570 $5,925 $5,179
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transition
provisions primarily related
to regulatory deductions and
adjustments impacting common
equity Tier 1 capital and
Tier 1 capital. We reported
under Basel I (which included
the Market Risk Final Rules)
at December 31, 2014 and
prior.
N/A - Not applicable.
Loan Originations
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Consumer loans
Mortgage (1) $5,824 96.0% $7,876 97.9% $6,603 98.5%
Other consumer (2) 39 0.6% 39 0.5% 27 0.4%
--- --- --- --- --- ---
Total consumer loans 5,863 96.6% 7,915 98.4% 6,630 98.9%
Commercial loans (3) 205 3.4% 131 1.6% 76 1.1%
--- --- --- --- --- ---
Total loan originations $6,068 100.0% $8,046 100.0% $6,706 100.0%
====== ===== ====== ===== ====== =====
Year Ended
December 31, December 31,
2015 2014
---- ----
Mortgage
(1) $29,402 98.2% $24,607 98.0%
Other
consumer
(2) 132 0.4% 93 0.4%
--- --- --- ---
Total
consumer
loans 29,534 98.6% 24,700 98.4%
Commercial
loans
(3) 415 1.4% 398 1.6%
--- --- --- ---
Total
loan
originations $29,949 100.0% $25,098 100.0%
======= ===== ======= =====
(1) Includes residential first
mortgage and second mortgage
loans.
(2) Other consumer loans include:
HELOC and other consumer
loans.
(3) Commercial loans include:
commercial real estate and
commercial and industrial
loans.
Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Consumer loans
Residential first mortgage $3,100 48.8% $2,726 49.5% $2,193 49.2%
Second mortgage 135 2.1% 140 2.5% 149 3.4%
HELOC 384 6.0% 405 7.3% 257 5.8%
Other 31 0.5% 32 0.6% 31 0.7%
--- --- --- --- ---
Total consumer loans 3,650 57.5% 3,303 59.9% 2,630 59.1%
----- ---- ----- ---- ----- ----
Commercial loans
Commercial real estate 814 12.8% 707 12.8% 620 13.9%
Commercial and industrial 552 8.7% 493 8.9% 429 9.7%
Warehouse lending 1,336 21.0% 1,011 18.4% 769 17.3%
----- ---- ----- ---- ---
Total commercial loans 2,702 42.5% 2,211 40.1% 1,818 40.9%
----- ---- ----- ---- ----- ----
Total loans held-for-investment $6,352 100.0% $5,514 100.0% $4,448 100.0%
====== ===== ====== ===== ====== =====
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Unpaid Number of Unpaid Number of Unpaid
Principal Principal Principal
Balance Balance Balance Number of
accounts accounts accounts
--- --- --------
Serviced for own loan portfolio (1) $6,088 30,683 $5,707 29,764 $4,521 26,268
Serviced for others 26,145 118,662 26,306 118,702 25,427 117,881
Subserviced for others (2) 40,244 211,740 42,282 220,648 46,724 238,498
------ ------- ------ ------- ------ -------
Total residential loans serviced $72,477 361,085 $74,295 369,114 $76,672 382,647
======= ======= ======= ======= ======= =======
(1) Includes loans held-for-
investment (residential first
mortgage, second mortgage and
HELOC), loans-held-for-sale
(residential first mortgage),
loans with government guarantees
(residential first mortgage),
and repossessed assets.
(2) Does not include temporary short-
term subservicing performed as a
result of sales of servicing-
released mortgage servicing
rights. Includes repossessed
assets.
Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Beginning balance $197 $222 $301 $297 $207
Provision (benefit) for loan losses (1) (1) 5 (19) 132
Charge-offs
Consumer loans
Residential first mortgage (7) (21) (9) (87) (38)
Second mortgage (2) (1) - (4) (3)
HELOC (1) (1) (1) (3) (6)
Other (1) (1) - (4) (2)
---
Total consumer loans (11) (24) (10) (98) (49)
Commercial loans
Commercial real estate - - - - (3)
Commercial and industrial - (3) - (3) -
Total commercial loans - (3) - (3) (3)
Total charge-offs (11) (27) (10) (101) (52)
Recoveries
Consumer loans
Residential first mortgage - 1 - 3 3
Second mortgage 1 1 - 2 1
Other 1 1 1 3 3
--- ---
Total consumer loans 2 3 1 8 7
Commercial loans
Commercial real estate - - - 2 3
Total commercial loans - - - 2 3
--- --- --- --- ---
Total recoveries 2 3 1 10 10
--- --- --- --- ---
Charge-offs, net of recoveries (9) (24) (9) (91) (42)
--- --- --- --- ---
Ending balance $187 $197 $297 $187 $297
==== ==== ==== ==== ====
Net charge-off ratio (annualized) (1) 0.62% 1.84% 0.91% 1.85% 1.07%
Net charge-off ratio, adjusted (annualized) (1)(2) 0.51% 0.61% 0.60% 0.45% 0.77%
Net charge-off ratio (annualized) by loan type (1)
Residential first mortgage 1.03% 2.88% 1.58% 3.34% 1.47%
Second mortgage 1.89% 1.04% 1.07% 1.72% 2.73%
HELOC and consumer 0.86% 1.35% 0.78% 1.18% 3.39%
Commercial real estate - % (0.03)% (0.08)% (0.29)% (0.16)%
Commercial and industrial (0.01)% 2.69% (0.03)% 0.71% (0.05)%
(1) Excludes loans carried under the
fair value option.
(2) Excludes charge-offs of $2
million, $16 million and $3
million, related to the sale of
nonperforming loans and TDRs
during the three months ended
December 31, 2015, September 30,
2015 and December 31, 2014,
respectively, and $69 million and
$11 million during the years ended
December 31, 2015 and 2014,
respectively.
Representation and Warranty Reserve
(Dollars in millions)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Balance, beginning of period $45 $48 $57 $53 $54
Provision (release)
Charged to gain on sale for 1 2 2 7 7
current loan sales
Charged to representation and warranty (benefit) provision (6) (6) (6) (19) 10
Total (5) (4) (4) (12) 17
Charge-offs, net - 1 - (1) (18)
--- --- --- --- ---
Balance, end of period $40 $45 $53 $40 $53
=== === === === ===
Composition of Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
December 31, 2015 Collectively Individually
Evaluated Evaluated
Reserves Reserves Total
----------------- ------------ ------------ -----
Consumer loans
Residential first mortgage $93 $22 $115
Second mortgage 5 6 11
HELOC 20 1 21
Other 2 1 3
--- ---
Total consumer loans 120 30 150
Commercial loans
Commercial real estate 18 - 18
Commercial and industrial 13 - 13
Warehouse lending 6 - 6
--- --- ---
Total commercial loans 37 - 37
--- --- ---
Total allowance for loan losses $157 $30 $187
==== === ====
September 30, 2015 Collectively Individually
Evaluated Evaluated
Reserves Reserves Total
------------------ ------------ ------------ -----
Consumer loans
Residential first mortgage $108 $21 $129
Second mortgage 6 7 13
HELOC 22 1 23
Other 1 - 1
--- ---
Total consumer loans 137 29 166
Commercial loans
Commercial real estate 13 - 13
Commercial and industrial 14 - 14
Warehouse lending 4 - 4
--- --- ---
Total commercial loans 31 - 31
--- --- ---
Total allowance for loan losses $168 $29 $197
==== === ====
Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Nonperforming loans $31 $37 $74
Nonperforming TDRs 7 6 29
Nonperforming TDRs at inception but performing for less than six months 28 20 17
--- --- ---
Total nonperforming loans held-for-investment 66 63 120
Real estate and other nonperforming assets, net 17 17 19
--- --- ---
Nonperforming assets held-for-investment, net (1) $83 $80 $139
=== === ====
Ratio of nonperforming assets to total assets 0.61% 0.64% 1.41%
Ratio of nonperforming loans held-for-investment to loans held-for-investment 1.05% 1.15% 2.71%
Ratio of nonperforming assets to loans held-for-investment and repossessed assets 1.32% 1.45% 3.12%
(1) Does not include nonperforming
loans held-for-sale of $12
million, $14 million and $15
million at December 31, 2015,
September 30, 2015, December 31,
2014, respectively.
Asset Quality - Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
30-59 Days Past Due 60-89 Days Past Due Greater than 90 days (1) Total Past Due Total Investment
Loans
--- -----
December 31, 2015
Consumer loans $10 $4 $64 $78 $3,650
Commercial loans - - 2 2 2,702
--- --- --- --- -----
Total loans $10 $4 $66 $80 $6,352
=== === === === ======
September 30, 2015
Consumer loans $13 $8 $60 $81 $3,303
Commercial loans - - 3 3 2,211
--- --- --- -----
Total loans $13 $8 $63 $84 $5,514
=== === === === ======
December 31, 2014
Consumer loans $34 $10 $120 $164 $2,630
Commercial loans - - - - 1,818
--- --- --- --- -----
Total loans $34 $10 $120 $164 $4,448
=== === ==== ==== ======
(1) Includes performing
nonaccrual loans that are
less than 90 days delinquent
and for which interest
cannot be accrued.
Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
TDRs
----
Nonperforming
TDRs at
inception but
performing for
less than six
Performing Nonperforming months Total
---------- ------------- -------------- -----
December 31, 2015
Consumer loans $101 $7 $28 $136
Commercial loans - - - -
Total TDR loans $101 $7 $28 $136
==== === === ====
September 30, 2015
Consumer loans $97 $6 $20 $123
Commercial loans - - - -
Total TDR loans $97 $6 $20 $123
=== === === ====
December 31, 2014
Consumer loans $361 $29 $17 $407
Commercial loans 1 - - 1
Total TDR loans $362 $29 $17 $408
==== === === ====
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
Nonperforming assets /Tier 1 + Allowance for Loan Losses. The ratio of nonperforming assets to Tier 1 capital and allowance for loan losses divides the total level of nonperforming assets held for investment by Tier 1 capital (to adjusted total assets), as defined by bank
regulations, plus allowance for loan losses. We believe these measurements are meaningful measures of capital adequacy used by investors, regulators, management, and others to evaluate the adequacy of capital in comparison to other companies within the industry.
December 31, September 30, December 31,
2015 2015 2014
---- ---- ----
Nonperforming assets / Tier 1 capital + allowance for loan losses (Dollars in millions)
(Unaudited)
Nonperforming assets $83 $80 $139
Tier 1 capital 1,435 1,393 1,184
Allowance for loan losses (187) (197) (297)
---- ---- ----
Tier 1 capital + allowance for loan losses $1,622 $1,590 $1,481
------ ------ ------
Nonperforming assets / Tier 1 capital + allowance for loan losses 5.1% 5.0% 9.4%
=== === ===
Basel III (transitional) to Basel III (fully phased-in) reconciliation. On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital.
We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures.
Additionally, the final Basel III rules place greater emphasis on common equity. In October 2013, the OCC and Federal Reserve released final rules detailing the U.S. implementation of Basel III and the application of the risk-based and leverage capital rules to top-tier savings
and loan holding companies. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial
measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until January 1, 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our
interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from our calculations based on their interpretation of the guidelines. Since analysts and banking regulators may
assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.
December 31, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital
(to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Capital (to Risk
Weighted Assets) Assets) Assets) Weighted Assets)
--------------- ------ ------ ---------------
(Dollars in millions)
(Unaudited)
Flagstar Bancorp (the Company)
Regulatory capital - Basel III (transitional) to Basel III (fully
phased-in) (1)
Basel III (transitional) $1,065 $1,435 $1,435 $1,534
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components (360) (209) (209) (209)
---- ---- ---- ----
Basel III (fully phased-in) capital (1) $705 $1,226 $1,226 $1,325
---- ------ ------ ------
Risk-weighted assets - Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional) $7,561 $12,474 $7,561 $7,561
Net change in assets (60) (224) (60) (60)
--- ---- --- ---
Basel III (fully phased-in) assets (1) $7,501 $12,250 $7,501 $7,501
------ ------- ------ ------
Capital ratios
Basel III (transitional) 14.09% 11.51% 18.98% 20.28%
Basel III (fully phased-in) (1) 9.40% 10.01% 16.35% 17.67%
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transition
provisions primarily related
to regulatory deductions and
adjustments impacting common
equity Tier 1 capital and
Tier 1 capital. We reported
under Basel I (which included
the Market Risk Final Rules)
at December 31, 2014.
December 31, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital
(to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Capital (to Risk
Weighted Assets) Assets) Assets) Weighted Assets)
--------------- ------ ------ ---------------
Flagstar Bank (the Bank) (Dollars in millions)
(Unaudited)
Regulatory capital - Basel III (transitional) to Basel III (fully
phased-in) (1)
Basel III (transitional) $1,472 $1,472 $1,472 $1,570
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components (160) (160) (160) (159)
---- ---- ---- ----
Basel III (fully phased-in) capital (1) $1,312 $1,312 $1,312 $1,411
------ ------ ------ ------
Risk-weighted assets - Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional) $7,582 $12,491 $7,582 $7,582
Net change in assets 148 (160) 148 148
--- ---- --- ---
Basel III (fully phased-in) assets (1) $7,730 $12,331 $7,730 $7,730
------ ------- ------ ------
Capital ratios
Basel III (transitional) 19.42% 11.79% 19.42% 20.71%
Basel III (fully phased-in) (1) 16.98% 10.64% 16.98% 18.25%
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transition
provisions primarily related
to regulatory deductions and
adjustments impacting common
equity Tier 1 capital and
Tier 1 capital. We reported
under Basel I (which included
the Market Risk Final Rules)
at December 31, 2014.
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flagstar-reports-fourth-quarter-2015-net-income-of-33-million-or-044-per-diluted-share-300209392.html
SOURCE Flagstar Bancorp, Inc.
